Principles of Macroeconomics

Term 3 2007-2008


Professor Todd Knoop

Office:              201 College Hall

Telephone:        895-4208  (voice mail)





Class Times:          9:15-11:30         Monday--Friday

                                    1:00-2:15           Monday--Thursday


Office Hours:         11:30-12:00       Monday--Friday (except first two Tuesdays of block)

Additional hours as needed or by appointment


Texts:                        N. Gregory Mankiw, Principles of Macroeconomics, fourth edition


Quantitative Reasoning          Jessica Johanningmeier

Consultant:                                    125 Library      

                                                            895- 4222 or

                                                            Web page:






Macroeconomics is the study of economies as a whole.  In this class we will attempt to answer five primary questions:


(1)   What are the sources of growth and why do some countries grow faster than others?


(2)  What creates inflation and is it possible to maintain stable prices?


(3)  What are the causes of unemployment, recessions, and macroeconomic volatility?


(4)  Is there anything the public or the government can do to eliminate recessions and maintain full employment of the work force?


 (5) Is international trade beneficial and what are its economic implications?


In Macroeconomics, we will focus on the economic terms you are most likely to hear about on the evening news: interest rates, output, inflation, the Federal Reserve, exchange rates, and unemployment to name a few.  It is because of this applicability to the real world that many of you will find Macroeconomics very interesting.  It is also why an active interest in the world around you will help you understand classroom material.  In fact, my goal for you in this class is simply to be able to understand the economic articles you read in the newspaper or the news you see on TV.  It is for this reason that you will be well served by paying attention to current events and participating in our frequent class discussions on recent economic happenings.


Economists are often portrayed as bickering and indecisive, probably for good reason. Economists are not in total agreement on the answers to many important questions relating to Macroeconomics.  Unfortunately, one of the most difficult aspects of Macroeconomics is this lack of universal truth.  It is because of this that the emphasis in this class will not be on always obtaining the “correct” answer to a question (if there is one) but on addressing questions in a systematic manner.  This approach differs from that used in many other topics of study and is a reason why many students often struggle in economics.  As a result, it is very important for you to attend class and keep current on all material.  Reading the book is a poor substitute for class attendance.


Remember: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy.  It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions.”       

                                                                        -- John Maynard Keynes


Class Format:  I plan on using class time in the following way.  The morning sessions will consist of lecturing from our main textbook, Mankiw.  The afternoon sessions will primarily be used for three purposes.  First, quizzes and exams will be given and reviewed during this time.  Second, class discussions will be conducted on any assigned readings outside of the textbook.  Third, in-class problems sets will be worked on in an effort to review important concepts from the lectures. 



Grading:  Course grades will be determined by four classes of assignments and will be based on 500 possible points.  I reserve the right to use my discretion at the margin and things such as class participation will be considered in borderline cases.


(1) Exams:  Two midterm exams and a selectively comprehensive final exam will be given.  Each midterm will be worth 100 points and the final will be worth 130 points.  If a make-up exam is needed, a time must be arranged in advance of the test date.


 (2) Quizzes:  Five quizzes will be given periodically throughout the term.  Each quiz will be worth 20 points.  The purpose of these quizzes is to give you an opportunity to identify your areas of weakness before an exam and also to ensure that you do not fall behind in class preparation.  The total points from quizzes will be 100 points.


 (3) Paper:  Each student will be required to write one short paper on a published newspaper or magazine article of your choice.  This paper should be related to a topic of current MACROECONOMIC interest and also should have some relationship to class material.  Included in this paper should be a brief review of the article, an explanation of the author’s point of view, and a critical analysis of the article.  This paper should be 2-4 pages long, excluding graphs, and will be worth 40 points.


(4) Class Participation:  Class participation will count for 30 points toward the final grade and will be assigned on the basis of both quantity and quality of participation. Topics that are important enough to find their way onto exams will definitely be reviewed extensively in class.  If you miss a class it is your responsibility to find out what announcements and other materials or assignments were presented in class. 



Academic Honesty: Academic dishonesty will not be tolerated and will be dealt with in accordance with Cornell’s student regulations.



Learning Disabilities: Cornell College is committed to providing equal educational opportunities to all students.  If you have a documented learning disability and will need any accommodation in this course, you must request the accommodation(s) from [the instructor of the course] as early as possible and no later than the third day of the term.  Additional information about the policies and procedures for accommodation of learning disabilities is available on the Cornell web site at







Also, additional articles and topical readings will be assigned throughout the semester.





Section 1: Introduction and the Data of Macroeconomics


Monday #1:         Supply and Demand                                                              Chapter 4



Tuesday #1:         Comparative Advantage                                                        Chap. 3, pg. 52-58      

                           Quiz #1



Wednesday #1:   Measuring Output                                                                  Chapter 10



Thursday #1: Measuring Inflation                                                                      Chapter 11

                           Quiz #2   



Section 2: Growth and Long-Run Macroeconomics



Friday #1:            Production and Growth                                                          Chapter 12                              


Monday #2:         Production and Growth, cont.                                                Handouts

                           Income Distribution   



Tuesday #2:         The Financial System                                                 Chapter 13      

                           Exam #1




Section 3: Money and Inflation


Wednesday #2:   LR Unemployment                                                                 Chapter 15



Thursday #2: The Monetary System                                                      Chapter 16

                           Quiz #3



Friday #2:            Inflation                                                                                 Chapter 17




Section 4: Business Cycles and Short-Run Macroeconomics


Monday #3:         Aggregate Demand and Supply                                              Chapter 20



Tuesday #3:         AD and AS, cont.                                         

                           Quiz #4



Wednesday #3:   Monetary and Fiscal Policy                                                    Chapter 21



Thursday #3: The Debate Over Stabilization Policy                               Parts of Chapter 22

                           Exam #2



Friday #3:            Stabilization Policy, cont.                                                       Handouts         



Section 5: International Trade and Open Economies



Monday #4:         Open Economy Macro                                                          Chapter 18

                           Short Paper Due

                      Quiz #5



Tuesday #4:         Open-Economy Macro, cont.                                                Chapter 23




Wednesday #4:   Comprehensive Final Exam